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Amdocs Explores OSS with Cramer Acquisition amid BSS Slowdown

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TMCnews Featured Article


July 19, 2006

Amdocs Explores OSS with Cramer Acquisition amid BSS Slowdown

By Robert Liu, TMCnet Executive Editor


Telecom billing specialist Amdocs (News - Alert) hopes to extend into the operations support systems (OSS) market through the acquisition of Cramer Systems Group, based in the U.K., a deal announced Tuesday for approximately $375 million in cash.
 
Analysts believe the acquisition represents a smart growth opportunity for Amdocs, especially given the slowdown in the company’s traditional telecom billing support services (BSS) business, which like telecom equipment manufacturers has been squeezed by industry consolidation.
 
“With this acquisition, Amdocs will become the only company to deliver an end-to-end solution spanning BSS and OSS,” said Amdocs CEO Dov Baharav. “Systems to date need to cope with many more new types of services and much higher volumes of IP-based activity. The traditional separation of BSS and OSS has led to highly fragmented business processes and proliferation of tactical, departmentally focused applications or silos including multiple inventory systems.”
 
“Service providers have recognized this problem and realized that they must act quickly as they have no time to waste. As a result, they are investing heavily in modernizing, streamlining and transforming their OSS infrastructure,” Baharav said on a conference call last night.
 
Amdocs, which is also schedule to report its quarterly results today, may have weathered the industry consolidation storm better than others. For example, back in January, the company beat out Convergys (News - Alert) for the billing and customer care business of the newly merged Sprint (News - Alert) Nextel. In addition, Amdocs fortified its OSS integration capabilities with the acquisition of content delivery platform provider Qpass (News - Alert) in April for $275 million.
 
“In our view, the acquisition of a leading provider of end-to-end service fulfillment solutions makes a lot of sense within the company strategy of expanding beyond their traditional and more mature telecoms BSS sector to other growth areas such as OSS (Cramer, XACCT), content (Q-Pass), emerging markets (Longshine) and cable (DST Innovis) on the back of the industry convergence,” wrote Tom Ernst, analyst at Deutsche Bank.
 
The only critique was the price and valuation associated with the Cramer acquisition. “We believe the company may have paid too high of a price, and remain cautious of the potential offsetting synergies, especially given the customer overlap (e.g. Bell Canada, Telefónica, BT and Vodafone) and the potential conflicts of interest with existing partnerships (IBM (News - Alert)),” Ernst wrote.
 
“Other options included possibly NetCracker and MetaSolv,” he added.
 
Cramer is a growing company with more than 80 customers worldwide. The company will form a new division in Amdocs, which will be the centerpiece of Amdocs' OSS strategy and activities, both companies said in a press release.
 
Cramer's current management will continue to lead the business.
 
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Robert Liu is Executive Editor at TMCnet. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit Robert Liu's columnist page.







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